EUR/USD closed last week below the 2nd square root relationship of the year’s high at 1.3730. The technical development suggests that the recent weakness in the exchange rate is likely more than just a correction and that a more important change in trend is taking shape. Clouding the negative technical picture is the second half of this week as a fairly important cyclical turn window is eyed around this time. A reversal during this turn window could see the Euro rally for a few weeks. This would fit the 35-year seasonal pattern for April which shows the exchange rate has a tendency to strengthen over the second half of the month. This technical/cyclical impasse is making the rate even harder than usual to analyze. The price action over the next few days should help clear up the picture a little bit. If the Euro can gain traction below 1.3640 over the next few days then any recovery that develops later this week is unlikely to be very aggressive. Failure to get under 1.3640 by Thursday on the other hand or any strength over 1.3820 and all bets are off.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved.